Epigral Limited — Q4 FY25 earnings call

Call held 8 May 2025

Management summary

Epigral Limited delivered a strong Q4 and FY25 performance, achieving record revenue and PAT, primarily fueled by the growth in its Derivatives & Specialty segment. The company successfully commissioned new capacities and significantly deleveraged its balance sheet. While facing some pricing headwinds in hydrogen peroxide and CPVC, management remains optimistic about future volume growth and margin sustainability through diversification and operational efficiencies.

Highlights

  • Highest ever revenue of ₹2565 crores in FY25.

  • Highest ever PAT of ₹357 crores in FY25.

  • Revenue growth of 33% in FY25 compared to FY24.

  • PAT growth of 82% in FY25 compared to FY24.

  • EBITDA grew by 48% to ₹711 crores in FY25, with EBITDA margin at 28% (up from 25% in FY24).

  • Net debt-to-EBITDA improved to 0.7x at the end of March 2025 from 2.0x at the end of March 2024.

  • Derivatives & Specialty business contributed 54% of the revenue in FY25, up from 45% in FY24.

Concerns

  • Hydrogen peroxide realizations dropped in Q4 FY25.

  • CPVC pricing is expected to be on the downward side in the next couple of quarters.

  • Caustic soda prices remain soft globally due to low downstream chemistry demand, leading to pressure on chlorine side.

Key financials

3 periods

Headline

  • Net Debt to EBITDA (Mar 2025)
    0.7

Q4 FY25

  • Revenue
    ₹631 Cr
    YoY +20%
  • PAT
    ₹87 Cr
    YoY +13%

FY25

  • Revenue
    ₹2,565 Cr
    YoY +33%
  • PAT
    ₹357 Cr
    YoY +82%
  • EBITDA
    ₹711 Cr
    YoY +48%
  • EBITDA Margin
    28%
  • ROCE
    25%

What they filed

Q1 FY27: revenue up 16.1%, net profit down 38.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue626 645 628 607 587 −6%597 −7%736 +17%705 +16%
EBITDA178 183 173 163 132 −26%103 −44%169 −2%179 +10%
Net profit81 104 87 160 52 −36%39 −62%82 −6%99 −38%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Derivatives & Specialty Business
    54% Revenue Contribution (FY25)45% Revenue Contribution (FY24)0.12 decimal fraction Sales Volume Growth (Q4 YoY)

Capital allocation

  • Capex ₹450 Cr internal accruals, with debt as an option if required
    • CPVC resin capacity expansion (to 1,50,000 tonnes)
    • Epichlorohydrin capacity expansion (to 1,00,000 tonnes)
    So capital expenditure, we have announced to expand CPVC resin by adding another 75,000 so we reach to 1,50,000 tonnes of capacity for CPVC resin. We are adding Epichlorohydrin, we are expanding Epichlorohydrin as well. So we will reach from 50,000 to 1,00,000 tonnes of capacity by the first half of FY'27. So in-line with that, this year we are expecting to spend the CAPEX around Rs.450 crore. ... So, the financing we are going to do it by debt and debt mainly, if required moving forward. But as of now, there is no, we are going to manage from the internal accrual. ... Definitely not, but if required we can plan from the bank going forward. So, debt and internal accrual is the option yes.
  • Debt 0.7× EBITDA
    Our net debt-to-EBITDA has remarkably improved to 0.7x at the end of March 2025 against 2.0x at the end of March 2024. This is mainly on account of reduction in debt and increase in the overall profitability of the company.

Guidance & targets

Revenue Contribution

  • Derivatives & Specialty Business Revenue Contribution Revenue Contribution · Once optimal utilization of new plants is reached · High confidence 70%
    Once we reach optimal utilization, and also as our expansion announcement of doubling capacity of CPVC resin and Epichlorohydrin facility will also reach optimum by that time, we expect the revenue contribution from Derivatives & Specialty business to reach around 70%.

    — Sanjay Jain

Capacity Utilization

  • Chlorotoluene Plant Optimal Utilization Capacity Utilization · End of this financial year (FY26) · High confidence Optimal
    We commissioned our chlorotoluene value chain facility in March 2025 and we expect to reach optimal utilization of the plant by the end of this financial year.

    — Sanjay Jain

EBITDA Margin

  • Average EBITDA Margin EBITDA Margin · Longer-term basis · High confidence 25%
    But at the same time, the Derivatives, there were other products which had compensated for that, and that's when the average EBITDA we have landed up around 28% and considering the situation, we believe that on a longer-term basis 25% is something which is achievable.

    — Milind Kotecha

Capex

  • Capex Spend Capex · FY26 · High confidence ₹450 crores
    So in-line with that, this year we are expecting to spend the CAPEX around Rs.450 crore.

    — Milind Kotecha

Commercialization

  • New Plants Optimal Ramp-up Commercialization · Around December/January (end of FY26) · High confidence Optimum
    So this year, we have commissioned the CPVC, CPVC compound and the chlorotoluene plant. So, all the three plants is ramping up so I guess by end of this year, maybe around December, January we will reach optimum kind of thing.

    — Milind Kotecha

Capacity Expansion

  • CPVC Resin Capacity Capacity Expansion · Future · High confidence 1,50,000 tonnes
    So capital expenditure, we have announced to expand CPVC resin by adding another 75,000 so we reach to 1,50,000 tonnes of capacity for CPVC resin.

    — Milind Kotecha

  • Epichlorohydrin Capacity Capacity Expansion · First half of FY'27 · High confidence 1,00,000 tonnes

    From 50,000 tonnes today

    We are adding Epichlorohydrin, we are expanding Epichlorohydrin as well. So we will reach from 50,000 to 1,00,000 tonnes of capacity by the first half of FY'27.

    — Milind Kotecha

Chlorine Consumption

  • Captive Chlorine Consumption Chlorine Consumption · FY27 (once ECH and CPVC capacity on stream) · High confidence 80-85%
    Yes. So in FY'27 we will commission the plant, so we will run partially and they will consume chlorine and hydrogen both. So we assume that 80%, 85% is something definitely achievable.

    — Milind Kotecha

Volume Growth

  • Volume Growth Volume Growth · FY26 · High confidence 10-15%
    So considering the CAPEX that we have commissioned this year, we should be seeing a volume growth around 10% to 15% and that will drive the value growth as well.

    — Milind Kotecha

  • Volume Growth (CAGR) Volume Growth · Next five years · High confidence 10-15%
    but one thing I can give you is the volume growth that we are expecting around 10% to 15% on a CAGR basis for next five years.

    — Maulik Patel

Pricing Trend

  • CPVC Pricing Pricing Trend · Next couple of quarters · High confidence Downward side
    Yes, so looking at the next couple of quarters, we are looking the CPVC on the downward side in terms of the value utilization, and then the ECH is on a slightly higher side compared to the past quarters, so this is what we see in next couple of quarters.

    — Maulik Patel

  • ECH Pricing Pricing Trend · Next couple of quarters · High confidence Slightly higher side

    — Maulik Patel

Operational Efficiency

  • Caustic Soda Plant Operational Efficiency Operational Efficiency · From next quarter onwards · High confidence Improve
    Every eight years you normally do a major change in the caustic soda membrane and electrolysis that we have already done, that is going to be completed in May, so probably from the next quarter onwards, the operation efficiency of the caustic soda plant will also improve.

    — Maulik Patel

What to watch in Q1 FY26

Chlorotoluene Plant Optimal Utilization

By December/January (end of FY26)
Current Ramping up
Target Optimal utilization

Why it matters

Successful ramp-up of chlorotoluene is key for revenue contribution and captive chlorine consumption.

So this year, we have commissioned the CPVC, CPVC compound and the chlorotoluene plant. So, all the three plants is ramping up so I guess by end of this year, maybe around December, January we will reach optimum kind of thing.

Risks & concerns

  • Softness in Caustic Soda Prices

    medium

    Caustic soda prices remain soft globally due to low demand from downstream chemistry (60-65% of chlorine use) and low PVC cycle, though demand from alumina and nickel mining is strong. This puts pressure on chlorine realizations.

    So, caustic soda price are remaining soft globally, the reason behind is the downstream chemistry which is used chlorine globally, which is almost 60% to 65% that is very low. So somewhere, even PVC cycle is on the lowest level right now and because of that, caustic is remain firm. That is one of the reason, and second biggest reason is the demand from the alumina side and the nickel mining side, it is also very strong so because of this two major reasons, we are thinking that the caustic soda will remain firm even current this financial year, as well as going forward also.

    Management acknowledged

  • Downward Trend in CPVC Pricing

    medium

    CPVC pricing is expected to be on the downward side in the next couple of quarters due to slower demand growth compared to last year and lower raw material (PVC) prices globally, impacted by the real estate sector.

    The pricing is seen downside because of, there is slightly demand growth is less compared to last year in terms of the CPVC demand. And the second, because of the real estate sector, is little bit lower side right now in terms of the growth. And the second is, the raw material price has also gone down for the CPVC, which is a PVC, so PVC is on the lowest cycle globally right now. So because of this two reasons we are thinking that it is going to reduce in terms of the revenue, in terms of the CPVC.

    Management acknowledged

  • Impact of New Large PVC Projects on Caustic/Chlorine Balance

    medium

    New large PVC projects coming online, which are backward integrated, could increase caustic availability and potentially keep caustic prices down, while potentially improving chlorine prices.

    Sure. The second question is again from the broader perspective, given that there will be couple of large PVC projects which are coming and mostly backward integrated, there will be an availability of caustic, although they will be consuming chlorine. So do we see that the ECUs will remain closer to say 30 plus minus 11, given that maybe chlorine realizations will go up, but availability of caustic will keep the caustic prices down, so to that extent, the ECU will be say Rs.30 plus minus. So, what is your broader thinking on that perspective. Thank you. ... Normally, if you see the caustic soda price in India, which is at par with the global prices of caustic soda. So definitely, what will and majority the players who are coming in a much bigger capacity their focus, they are not able to manage locally. So definitely, the major volume will go out in the global market, and it will be adjusted according to the global prices of the caustic soda that point of time. And the chlorine we believe because of these two capacities of caustic soda is coming up so we believe the chlorine may go on the positive side.

    Analyst acknowledged

Q&A highlights

5 direct
Hydrogen Peroxide Margins and Product Diversification Direct
See, that's where we have always tried to diversify our business model, we are getting into different set of products. So currently, a quarter, the hydrogen peroxide relations were down. But at the same time, the Derivatives, there were other products which had compensated for that, and that's when the average EBITDA we have landed up around 28% and considering the situation, we believe that on a longer-term basis 25% is something which is achievable.

Analyst questioned on declining hydrogen peroxide realizations, and management explained their strategy of diversification into higher-margin derivatives to maintain overall EBITDA margins.

Asked by Dikshant Gupta

New Plants Commercialization Timeline Direct
So this year, we have commissioned the CPVC, CPVC compound and the chlorotoluene plant. So, all the three plants is ramping up so I guess by end of this year, maybe around December, January we will reach optimum kind of thing.

Analyst sought clarity on the ramp-up and commercialization timeline for newly commissioned plants, which is crucial for future revenue contribution.

Asked by Dikshant Gupta

Captive Chlorine Consumption and Future Expansion Direct
So, once the chlorotoluene consumption, same time we are also expanding CPVC as well as the Epichlorohydrin. So once everything will be commissioned to reach that optimum level, definitely it will take time after commissioning of the plant. But, once it reached at optimum level, we are 90% going to be a internal and captive consumption going forward and the pipeline customers are hardly it is 20% maximum right now, and that is going to be remain constant. I don't think it will increase further from this table.

Analyst inquired about the increase in captive chlorine consumption with new capacities, and management clarified the expected internal consumption percentage and limited pipeline sales.

Asked by Nirav Jimudia

Caustic Soda Price Outlook and Chlorine Demand Direct
So, caustic soda price are remaining soft globally, the reason behind is the downstream chemistry which is used chlorine globally, which is almost 60% to 65% that is very low. So somewhere, even PVC cycle is on the lowest level right now and because of that, caustic is remain firm. That is one of the reason, and second biggest reason is the demand from the alumina side and the nickel mining side, it is also very strong so because of this two major reasons, we are thinking that the caustic soda will remain firm even current this financial year, as well as going forward also.

Analyst asked for an outlook on international and domestic caustic soda prices, which directly impacts the company's profitability and chlorine realization.

Asked by Pinaki Banerjee

New Chemistry and Future CAPEX Plans Partial
Not at this moment of time. So once Board will approve it, definitely we will do it. But, we are looking for a couple of chemistry which we are planning to do it based on the India growth story on the next 10 years. ... So overall see, so you can divide the entire project in the couple of phases also, so that the planning in terms of the phases, how many phases we will do it, the entire CAPEX it is not yet decided and Board has not approved it, but once the Board will approve, we will do it the phase wise investment how much we are going to do it in the new location?

Analyst probed for details on new chemistry plans and associated CAPEX, indicating future growth avenues, but management stated it's not yet board-approved or fully decided.

Asked by Jainam Ghelani

Impact of New PVC Projects on ECU and Caustic Prices Direct
Normally, if you see the caustic soda price in India, which is at par with the global prices of caustic soda. So definitely, what will and majority the players who are coming in a much bigger capacity their focus, they are not able to manage locally. So definitely, the major volume will go out in the global market, and it will be adjusted according to the global prices of the caustic soda that point of time. And the chlorine we believe because of these two capacities of caustic soda is coming up so we believe the chlorine may go on the positive side.

Analyst raised a critical concern about the impact of new large PVC projects on caustic soda availability and prices, and management explained the global market dynamics and potential positive impact on chlorine.

Asked by Rohit Nagaraj

2 min read 5 chapters

Detailed narrative

Strong FY25 Performance Driven by Derivatives & Specialty

Epigral Limited achieved its highest ever revenue of ₹2565 crores and PAT of ₹357 crores in FY25, marking a 33% growth in revenue and an 82% growth in PAT compared to FY24. This robust performance was largely attributed to the Derivatives & Specialty business, which increased its revenue contribution to 54% in FY25 from 45% in the previous year. The company also reported a 48% growth in EBITDA to ₹711 crores, with the EBITDA margin expanding to 28% from 25% in FY24, reflecting the success of its diversification strategy into higher-value products.

Capacity Expansion and Commercialization Progress

The company has commissioned new chlorotoluene, CPVC, and CPVC compound plants, which are currently ramping up and are expected to reach optimal utilization by December/January of FY26. Epigral plans to spend approximately ₹450 crores on CAPEX in FY26, primarily for expanding CPVC resin capacity to 1,50,000 tonnes and Epichlorohydrin capacity from 50,000 to 1,00,000 tonnes by the first half of FY27. These expansions are projected to drive a volume growth of 10-15% in FY26 and maintain a CAGR of 10-15% over the next five years.

Improved Financial Health and Credit Rating

Epigral significantly strengthened its balance sheet, with the net debt-to-EBITDA ratio improving remarkably to 0.7x at the end of March 2025, down from 2.0x a year prior. This improvement is a result of debt reduction and increased profitability. The company's Return on Capital Employed (ROCE) also improved to 25% for FY25 (17% in FY24), reaching 28% when excluding capital work-in-progress. This financial stability was recognized by CRISIL, which upgraded Epigral's rating to AA Stable from AA- positive outlook.

Market Dynamics and Product Realizations

While the company's overall performance was strong, some product segments faced headwinds. Hydrogen peroxide realizations dropped in Q4 FY25, and CPVC pricing is anticipated to be on a downward trend in the next couple of quarters due to slower demand growth and lower global PVC prices. Conversely, ECH pricing is expected to be slightly higher. Management noted that global caustic soda prices remain soft due to low demand from downstream chemistry, but strong demand from alumina and nickel mining helps maintain firmness.

Future Strategy: New Chemistry and Operational Efficiency

Epigral is actively exploring new chemistry value chains for a new 100-acre location, with plans to be disclosed upon Board approval, aiming for long-term growth and further diversification. The company also expects improved operational efficiency from its caustic soda plant starting next quarter, following a major membrane and electrolysis change completed in May. The long-term average EBITDA margin target remains at 25%, supported by the strategic shift towards high-value products and integrated operations.

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